Why Won’t Firms Do More “Good” With Less Profit?

Last week, when I asked my friends on Facebook for their opinion on my recent presentation on Beyond Business As Usual, I was asked by one friend “whatever happened to doing the right thing even if it impacted the profit, the bottom line?”

It was a great question, and I had two hree reasons why more firms have not traditionally been willing to see “good” as the “right” thing to do through their corporation:

1) “Right” in the corporate context has largely meant something that was night “right” in the environmental, social, or economic context. “Right” was about shareholder benefit.
2) “Right” has largely been intangible polar bears, volunteering, etc where a direct/ tangible tie to the firm’s business model was not made

Which lead to my third point

3) The failures that are occurring are changing that because governments and consumers are now growing aware and catalyzed (in specific tangible ways).

Which is essence, core to the “Beyond Business as Usual” model. That, after a period where corporations were trusted to be stewards while maximizing profit, are now showing themselves as being unable to maintain the balance. An imbalance that is now leading to a period of recalibration.

And the exampel I offered to support this was in the banking/ financial services sector. A sector that for years the said it could self regulate, be trusted, and be stewards of economic stability and growth. After 2008 though, that all changed (and is continuing to change) to the point where banks were being told how much their bonuses could be.

Which was for banking executives a disruptive shift in their practice, and one they were very vocal about, but more widely is a sign of how far things are come… and where things in other industries like oil, big auto, electronics, and food are likely to follow a similar disruptive pattern where consumers and government agencies push the line of “normal” business practices towards sustainable and responsible practices.

A shift that is towards “good” and “right”, but for many firms will be painful.

For others though, seeing where the tectonic plates are shifting is going to be a HUGE advantage as it will allow the firm to position itself in a way that not only insulates them from consumer/ government reaction, but puts them in a place to take advantage of the disruption.